The Supreme Court has cautioned High Courts against quashing criminal cases even at the stage of investigation and said the inherent power under Section 482 Cr. PC should not be exercised to stifle a legitimate prosecution.
A Bench of Justices B. Sudershan Reddy and S.S. Nijjar also held that a company could be prosecuted just like any individual, rejecting the contention that it could not have any intention to deceive.
“The High Court should normally refrain from giving a prima facie decision in a case where all the facts are incomplete and hazy, more so when evidence has not been collected and produced before the court and the issues involved, whether factual or legal, are of such magnitude that they cannot be seen in their true perspective without sufficient material.”
The Bench was setting aside a Bombay High Court judgment, which quashed a criminal complaint filed by Iridium India Telecom Ltd against Motorola Incorporated and its directors on allegations of cheating in respect of an iridium system/iridium project.
The High Court had acted on a petition from Motorola, taking the view that a company being a juridical person could not have the intention to deceive, “which is the necessary mens rea for the offence of cheating.”
Allowing the appeal by Iridium India against this judgment, the Supreme Court said: “The power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases. The court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint, and the inherent powers do not confer arbitrary jurisdiction on the court to act according to its whim or caprice.”
Writing the judgment, Justice Nijjar pointed out that virtually in all jurisdictions across the world governed by the rule of law, companies and corporate houses could no longer claim immunity from criminal prosecution on the ground that they were incapable of possessing the necessary mens rea (criminal intention) for the commission of criminal offences.
The Bench said, “The legal position in England and the United States has now crystallised to leave no manner of doubt that a corporation would be liable for crimes of intent.” The judges, quoting various U.S. and House of Lords judgments, said: “A corporation is virtually in the same position as any individual and may be convicted of common law as well as statutory offences including those requiring mens rea.”
Quoting a U.S. judgment, the Bench said: “It is true that there are some crimes which in their nature cannot be committed by corporations. But there is a large class of offences, of which rebating under the federal statutes is one, wherein the crime consists in purposely doing things prohibited by the statute.” If corporations were not held responsible, many offences might go unpunished and acts would be committed in violation of law, the Bench said.
The appellant was entitled to an opportunity to establish that the company (against which the complaint had been lodged) and its representatives were aware of the falsity of the representations at the time they were made. The High Court had clearly exceeded its jurisdiction in quashing the criminal proceedings, the Bench said.